The Context
In September 2013, when President Xi Jinping announced China’s intent to implement its Belt-Road Initiative (BRI),1 its breadth and scope promptly spawned an extensive debate about its actual objectives. The BRI’s often-cited objective is that this plan serves as a mechanism for China to secure access to the energy and resources of countries in emerging economies in Southeast Asia, Central Asia and Europe. What’s more, the BRI professedly serves to cultivate a network of economic inter-dependence involving inter-linked countries in these continents, a method that, presumably, would help to maintain regional stability. The BRI’s official objectives are five-fold: policy coordination, connecting infrastructure, unimpeded trade, financial integration and people-to-people bonds. Beyond these specific objectives are broader perspectives of China’s desire to re-make a world order that it feels is heavily biased in favour of the West (Chatsky and McBride 2019; Macaes 2019). There is a history and logic to these narratives.
In 2001, with China’s sponsorship, the Shanghai Cooperation Organisation (SCO) was established. The constituent members of the SCO were China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.2 India and Pakistan joined the SCO in 2017. There are considerable similarities in the objectives and roles of the SCO and BRI. For instance, the official BRI goals are similarly espoused by the SCO. There are overlaps in their economic domains. And, the SCO’s principal objective is economic integration of the entire Asian continent (Rowden 2018; Cai 2017). In October 2012, Wang (2012), at Peking University, proposed that China rebalance its geopolitical strategy towards Central Asia and Eurasia.3 The BRI would go on to expand this coverage to include nations of the Indian and Pacific Oceans. The BRI combines two initiatives—the (land-based) Silk Road Economic Belt, comprising six development corridors, and the 21st-Century Maritime Silk Road.4
Another aspect of the BRI, one related to its execution was the launch of the Asia Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), both in 2015.5 By 2017, China had become a key stakeholder in Southeast Asia’s economic development, being the top trading partner of more than half the countries of Southeast Asia (Table 1.1). There has also been a surge in investments by China into Southeast Asia.
Table 1.1
China’s Importance in the Trade of Southeast Asian Countries, 2017
Country | China’s Rank as Export Destination | China’s Rank as Import Source | China’s Rank as Trading Partnera |
|---|---|---|---|
Brunei | >5 | 1 | 4 |
Cambodia | >5 | 1 | 1 |
Indonesia | 1 | 1 | 1 |
Laos | 1 | 2 | 2 |
Malaysia | 2 | 1 | 1 |
Myanmar | 1 | 1 | 1 |
Philippines | 4 | 1 | 1 |
Singapore | 1 | 1 | 1 |
Thailand | 1 | 1 | 1 |
Vietnam | 2 | 1 | 1 |
Based on a review of China’s investments in Southeast Asia, this volume argues, with case studies of specific enterprises as evidence, that an important outcome of the BRI is that of growing ‘state-state’ ties.6 These state-state ties forged by China with Southeast Asian countries are particularly visible in Malaysia. Based on these state-state ties, enterprises owned by the governments of both countries have been employed to jointly mount projects, creating what can be classified as ‘public-public partnerships’. However, private investors are still privy to government incentives. In the process, novel and diverse forms of ‘state-business relations’ have emerged, with some ventures controversial in nature, with evidence of anomalies, while others have potentially productive outcomes.
The State’s Central Role
This book focuses on the implications of two core and related issues: first, the central role of the state in economic development in Southeast Asia. Second, the active role of the Chinese state in business, through its state-owned enterprises (SOEs),7 has contributed to the building of a new state-business order, one fundamentally different from the dominant neoliberal system created by the United States and its allies after the Second World War.
On the first issue, a lack of democratic tradition among diverse political systems and widely reported rising authoritarianism are factors that have contributed to a strong state in Southeast Asia.8 In this book, the centrality of the state in Southeast Asian economies is reviewed through an assessment of business links fashioned by the governments of China and Malaysia, a nexus that has contributed to an escalation of the phenomenon of state-state relations.9 The economic relations between China and Malaysia, cultivated through the active deployment of companies owned by these two governments, have fostered the rise of important novel and innovative forms of state-business relations (SBRs), or affiliations between governments and businesses. A different mode of entry by multinational companies into developing economies has emerged, through investments implemented by SOEs and state-supported private enterprises.10 To ensure the implementation of these projects, the funds have been provided by China’s state-owned financial institutions.
Soon after the BRI was introduced, numerous countries in Southeast Asia promptly endor...